As real-time payment systems become more widespread, the most recent innovations lie in value-added or ‘overlay’ services that complement the core service.
As more and more countries come online with real-time payments infrastructures – Australia, Europe and the US went live in 2017 – the general consensus developing is that the real value lies beyond a surge in speed.
Of course, instant payments are growing in importance as more of the global workforce shifts to the 'gig economy'. Whether an Uber driver, Airbnb host or TaskRabbit freelancer, many find getting paid immediately is a valuable service. However, true transformation in payments will be brought about by the increased amount of information that can travel with a payment, which is why all new iterations of faster payments are embedding the ISO 20022 message format in their design, enabling more standardised rich data points.
True transformation will be brought about by the increased amount of information that can travel with a payment
Many new systems have focused first on adding non-payment capabilities that complement the core payment service – such as confirmation of payee, which confirms that the payee is who they say they are, and request to pay, which allows consumers to have more control over when they pay their bills.
More information lays the foundations for 'overlay services', or value-added services built on top of the scheme by banks and third-party providers (TPPs). This is the competitive space where innovation is expected to happen, whether by banks, fintechs or other TPPs.
For example, the first overlay service launched on Australia’s New Payments Platform, called Osko by BPAY, carries 280 characters of text, including emojis, with each fast transfer. Later this year, Osko will be rolling out simple payments with an invoice or receipt attachment.
While it is early days for overlay services, many banks are convinced that the combination of real-time payments and open banking/open application programming interfaces will be a game-changer in future. The future is fast – and open.
